The Liberal Democrats will pledge to stop banks charging excessive penalties for customers exceeding their overdraft limit.

The party's manifesto for consumers will also contain measures to limit charges for bouncing a cheque and cap the interest rates on credit cards.

Lib Dem leader Nick Clegg said banks should not be allowed to "profiteer" from people making small mistakes.

The move follows a legal victory for the banks last year which prevented the Office of Fair Trading investigating their overdraft charges.

Mr Clegg said: "Banks should, of course, be able to pass on the costs they incur in dealing with these problems.

"But they should not be able to profiteer from customers making small mistakes. We will outlaw unfair charges from now on."